Not only is your vehicle one of the larger purchases you will make but it is also one that facilitates almost every other aspect of your life. Without a vehicle, you are forced to rely on public transportation, cab service or the good nature of friends and family to drive you around.
In larger cities, it might not be a big an issue to use a bus or train but not all towns and cities provide reliable transit nor is there coverage to more remote locations.
So protecting your investment and your mobility is important.
And sadly, accidents do happen so it is only wise to have good auto insurance. Whether you are coming up for a policy renewal or seeking insurance for your first vehicle, knowing a few auto insurance tips will ensure that you get a policy that meets all of your needs at a reasonable cost.
How the Rates Work
The first information to understand is how the rates work. It might sound odd but a female can expect to get a lower rate than a male at least when both are in their early 20’s. It has nothing really to do with which gender is the better driver, it is about which gender is considered to be the bigger risk takers. On average, men are more likely to speed, get a DUI and be involved in a more serious accident. It’s not about the volume of accidents but about the seriousness of the accidents and the damage that they cause. There is also a correlation about risk taking and being single. A single person is viewed as more willing to take risks, regardless of their gender, and as a result a single driver will pay a little bit over 20% more for the exact same policy as a married driver.
Your Credit is Important
Everyone knows that your credit score is a rating system that determines your creditworthiness. But many drivers don’t know that it is also going to have an impact on your insurance premiums. First, a responsible person pays their bills and pays them on time. That results in a good credit score. So in a way, your credit score is also a good indication of how responsible you are and whether or not you are willing to take risks. So insurance companies look at the number to judge your level of responsibility and prudence when driving. So think about your car insurance premiums before you elect to skip a credit card payment so that you can spend the money on a quick trip to the beach next weekend. If you don’t have credit, here is how you can start building credit.
Choose Your Vehicle Wisely
Keep in mind that the value of your vehicle will influence the cost of your insurance, but also the type of vehicle will have an influence. Your insurance company is not only promising to fix your car if you are in an accident but they are also pledging to repair any damage that you might cause with your vehicle. So it is simple physics that explains why you pay much more to insure a large truck than you do a small sedan. A large truck could cause much more serious damage to another vehicle as well as any personal property that it hits.
Other factors that will increase your insurance premiums are the safety rating of the vehicle and the performance level that it is designed for. Again, a sedan is much less likely to be street racing than a high performance sport model. So to keep your rates more reasonable, consider a car that is not extremely fast, doesn’t have a lot of aftermarket modifications and is moderately sized. This can help to make your rates more affordable especially if you are young and paying a higher rate due to age.
Consider Your Coverage
Knowing how much insurance coverage you want to carry can be a tough decision to make. Many drivers are only really interested in meeting the legal requirements of their state, but that can leave you in a difficult position if you are in a serious accident. State minimums are normally not enough to cover the complete cost of your loss.
If you have a loan on the vehicle, your lender will require you to carry enough to cover the cost of replacement. But even if you are not carrying a loan, consider carrying enough insurance to replace your vehicle. Many times, it is only a few dollars more each month to purchase double or even triple the amount of the state minimum insurance. It is an investment that you hope to never have to use but one that you will be glad to have if you ever in a serious accident.
Think About Your Deductible
Having a higher deductible will make your monthly insurance premiums lower, but you need to understand what the ramifications can be for that higher deductible. Most drivers are able to cover a deductible of up to $250 pretty easily. But having a deductible of $1,000 or more could be difficult to pay. Think about having no car and possibly being hurt and missing some work. Will you have a way to pay an unexpected bill of $1,000 or more?
If not then you will not be getting your car fixed. If you decide it is worth the monthly savings to have a higher deductible, then be smart and open a savings account that you will make regular deposits into until the balance is equal to or a little bit more than the amount of your deductible.
Keep that emergency fund in place, even when getting title loans with no job, and only use it to pay a high deductible. Once you have saved enough, then you can realize the benefits of the lower monthly premiums and enjoy the extra cash you have each month.
Using these few auto insurance tips can help you to better understand how your auto insurance premium is determined and how you can control how much you pay each month to insure your vehicle. Saving a few dollars is always a good idea unless it involved buying a cheaper product that isn’t really going to protect you if you are in an accident.
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